What causes poverty?
Life events, like illness or redundancy, can cause poverty. But it is mostly caused by structural issues, and exacerbated by increasing living costs, creating a cycle that keeps people trapped in hardship.
That can include unemployment and low-paid, insecure work. People who have not had easy access to training or education can struggle to land a secure job, making it harder to escape poverty.
The UK’s welfare system also makes it difficult for those struggling to get a decent income. Social security is not enough for people in work, looking for work or dealing with health issues to avoid poverty, according to the Joseph Rowntree Foundation.
Benefits can be difficult to access, and in some cases mean people risk lowering their income by getting a job. It’s particularly difficult for people dealing with mental health issues like addiction to escape poverty, and people who have been in prison can find it difficult to get a job to support themselves.
Break the cycle of poverty for good
Big Futures is calling on the Government to put in place a plan and policies to break this cycle of poverty for good. We are calling for long-term solutions to meet the biggest issues faced in the UK today – the housing crisis, low wages and the climate crisis. Dealing with these issues will help the UK to protect the environmental, social, economic and cultural wellbeing of future generations. So that young people and future generations have a fair shot at life. Join us and demand a better future.
How has the cost of living crisis affected poverty?
Although benefit boosts during the pandemic, such as the universal credit uplift, contributed to a drop in poverty in 2020/2021, the Resolution Foundation says that this has largely been undone.
The cost of living crisis, fuelled by stagnating wages, Brexit, global oil price fluctuations, the pandemic, and the war in Ukraine, means that millions are facing poverty.
In April, 6.8 million adults had smaller meals than usual or skipped meals because they couldn’t afford or get access to food, according to the Food Foundation. A total of 2.4 million adults had gone a whole day without food because they could not afford to eat.
What are the consequences of poverty?
Poverty drives chronic stress as a result of worrying about how to afford living costs day to day, increases feelings of hopelessness, makes it more difficult to access healthcare and lowers self esteem.
That stress – and difficulty affording nutritious food – also means those living in poverty are more likely to experience health problems, while finding it tougher to get treatment. This is worsened by soaring fuel bills amid the energy crisis.
People in poverty are also less likely to have strong social support networks around them because all their energy has to be used to survive with few resources. This puts them at higher risk of homelessness and addiction problems.
Children living in poverty are more at risk of being exploited by or becoming victim to criminal gangs, the Children’s Commissioner warned, highlighting local authority “failure” to stop disadvantaged children from falling through the cracks in services.
What is the poverty line and how is UK poverty measured?
Households are below the poverty line if they earn 60 per cent of the median earnings at the time. However the figures are adjusted according to how many people are in a household since their income needs will differ.
The Minimum Income Standard identifies what incomes different households require to reach a minimum socially acceptable living standard. You can calculate how much you need to earn for a decent standard of living using the Joseph Rowntree Foundation’s calculator.
For example, a two-parent family with two children in primary school currently needs to earn £42,418 between them so that your income, after tax and benefits adjustments, is enough to cover what is needed for a minimum decent standard of living.
The UN measures poverty in a different way. Its definition of absolute poverty includes people who cannot afford basic essentials like food, clothing and housing. This measure makes it easier to compare conditions between countries – as the minimum income to keep up with basic living standards differs depending on where you are.
The Social Metrics Commission calculates poverty taking into account costs like childcare and expenses linked to living with a disability. They also look at liquid assets, like savings and shares, that could act as a financial safety net.
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Who is most affected by poverty?
There is a high poverty rate among families with children due to a combination of extra costs and childcare responsibilities. This means around 4.3 million children live in poverty in the UK. This impacts single parent families more, with 44 per cent of children with lone parents in poverty according to the Child Poverty Action Group.
Disability also significantly increases someone’s chances of falling into poverty. It means extra living costs, care costs and difficulty finding suitable work.
Ethnic minorities face high poverty rates in the UK, with 46 per cent of children in Black, Asian and minority ethnic (BAME) households affected compared to 30 per cent of all kids.
Poverty significantly impacts migrants too. The government’s no recourse to public funds policy locks people out of the social security system depending on their immigration status. It drives high poverty rates and puts them at an elevated risk of homelessness.
Gender affects poverty, with three million women in low paid jobs compared to 1.9 million men. Two-earner families where one partner works full time and the other works part-time are twice as likely to be pulled into poverty now compared to two decades ago, according to IPPR.
How does debt affect poverty?
Poverty can often cause a vicious cycle of debt. People on low incomes can be forced to rely on loans and credit to get by, racking up interest and arrears over time which amounts to more than they can afford to work their way out of. The UK’s debt is rarely shared equally, affecting poorer people more than it does the wealthy.
Household debt was on the rise even before the Covid-19 crisis. Seven million people were stuck in problem debt in 2018, according to the Centre for Responsible Credit, handing out more than a quarter of their income to pay off debt.
The UK’s poorest households accounted for nearly half of those hit by debt and were paying out three times more than indebted households with the highest incomes. It was down to low pay, cuts to the welfare system and insecure work, according to debt campaigners Jubilee Debt, accusing lenders of exploiting the desperation of people in poverty by charging extremely high interest rates.
What would it take to end poverty in the cost of living crisis?
Most campaigners agree reforming the welfare system is key to cutting UK poverty rates.
The five-week wait for a first universal credit payment has been shown to push people deeper into debt, driving food bank use and rent arrears. The two-child limit, which restricts the amount a family can receive in benefits to the first two children in a family should be scrapped too, experts say, if struggling families are to have enough money to live on. That’s along with the benefit cap, limiting the total amount people can receive regardless of what their full entitlement is.
In March 2020, the government introduced a £20-a-week increase to universal credit payments in response to the Covid-19 crisis. But ministers cut the benefit back to pre-Covid levels in October 2021.
Crucially, the government did not give this increase to people on so-called “legacy benefits” like employment and support allowance. The DWP pays these to people whose disabilities make it difficult for them to work. Campaigners want the increase to be extended to them to cover higher living costs as well as pandemic expenses.
Following the chancellor’s Spring Statement in March, campaigners urged the government to increase universal credit in line with inflation while Labour has called on the government to introduce a windfall tax on oil and gas companies to protect households from soaring energy prices.
Increasing wages across the board – as well as strengthening the welfare system and reforming the rental market – is key to cutting poverty, according to a coalition of nearly 40 organisations.
Ministers must raise the minimum wage by 20 per cent for people on zero hours contracts as well as increasing housing benefits if they are to tackle UK poverty in the short-term, IPPR researchers said.
But without long-term reforms the government will face a perpetual choice between paying “constantly rising” social security bills or “allowing the number of working families in poverty to increase unchecked, as is currently the case,” according to their report.
That should involve more bargaining power for unions as well as transforming the benefits system – which was “eroded during the transition to universal credit” – to ensure people are better off.